Sub-tenant refuses to pay rent

Comms69

D8D wrote: »

Tax on what? I'm not making any profit or income from this, it's purely rent payment to cover the main rent, the sum is identical.

No, It is income. It is money you receive as a landlord.


You are liable to pay a minimum of 20% tax on the vast majority of this income. (potentially more if your gross annual income exceeds the threshold)

hazyjo

D8D wrote: »

Tax on what? I'm not making any profit or income from this, it's purely rent payment to cover the main rent, the sum is identical.

That's like me saying I'm taking on a second job to pay my mortgage so I won't have to pay tax on it. It's additional income. Please read up on the 'rent a room scheme'. It should explain your rights, etc. (Generally regarding lodgers, that is. Not sub-tenants, excluded tenants, or whatever else they may have been called.)

Jenniefour

D8D wrote: »

there's no income/profit, the occupier simply pays a share of the rent. The rent he pays me is what gets paid to the landlord.

Your lack of understanding and knowledge here is worrying. You are solely responsible for paying the agreed rent for the property to the landlord. Whether you have lodgers or not. The landlord has given you permission to have lodgers. The fact that you use their money towards the rent is neither here nor there as far as the lodgers are concerned - it is not their business or their responsibility.

I think you're very fortunate that your lodger hasn't signed anything - partly because you may well have given them a tenancy agreement instead of a lodger agreement, and it gives you time to get yourself informed.

I don't think it's a good idea, in these circumstances, to make the person leaving wait up to a month to get back their deposit which, in turn, is dependent on the next person paying their deposit. I think it's outrageous actually - and I imagine your current lodger is of the same/similar opinion which is why he's asked you to use it as the last months rent. Lodgers should get their deposit back (minus any legit deductions) on the day they leave or very shortly afterwards. And you, as a live in landlord, should have sufficient funds to return a deposit to a leaving tenant without relying on finding the next one first.

Please read Comm's replies carefully.

Just read your contract - it's problematic so it's to your advantage it hasn't been signed. Otherwise you could be heading for a very rocky time indeed if your lodger had chosen to take advantage of your lack of knowledge. You need a very simple lodger agreement.

In your shoes I would agree with your lodger that he can have the last month using the deposit and hope there's no damage.

theartfullodger

D8D wrote: »

Tax on what? I'm not making any profit or income from this...........

The INCOME you are making is the rent paid to you: The clue is in the name of the tax, "INCOME TAX".


You presumably wouldn;t suggest that a landlord who rents his place out but has a large expensive mortgage shouldn't bother declaring his rent income to HMRC ?? Sadly there are too many tax-fiddling landlords out there, and the more that get caught the better!


Artful: Landlord.



Incidentally HMRC is very commonly informed of landlords (you are a landlord...) renting places out where there is a suspicion of tax avoidance/evasion. One of your tenants/lodgers/neighbours/"friends" could do so easily....

Slithery

D8D wrote: »

I'm simply trying to understand if by me being a Resident Landlord and him an Excluded Occupier, does him breaching the contract effectively revert things to the law/rights of a resident landlord, which means being able to give reasonable notice?

No.

D8D wrote: »

Tax on what? I'm not making any profit or income from this, it's purely rent payment to cover the main rent, the sum is identical.

You are receiving income, the fact that you are choosing to spend it on your rent is irrelevant. The clue is in the name Income Tax (not Profit Tax).

If they are tenants then you should have been declaring this income annually to HMRC and probably paying additional tax on it.

Comms69

Slithery wrote: »

No.
You are receiving income, the fact that you are choosing to spend it on your rent is irrelevant. The clue is in the name Income Tax (not Profit Tax).

If they are tenants then you should have been declaring this income annually to HMRC and probably paying additional tax on it.

Or lodgers as the individual rent is £680 per month and individually the exceed rent a room, let alone combined

Slithery

Comms69 wrote: »

Or lodgers as the individual rent is £680 per month and individually the exceed rent a room, let alone combined

Yep, thanks for that. I didn't have enough time to go back through the thread to see if the rent amount had been mentioned. But more than £7500 and it has to be declared.

So as a quick calculation even if you are in the lowest tax bracket that's 2x12x£680x20%=£3264 in tax that you've been evading every year. HMRC are going to want a serious word with you if/when they find out...

G_M

Based on your posts, I have run Shelter's Tenancy Checker here which concludes he is an Excluded Occupier.

Fortunately for you that means the deposit did not need to be protected.

However, you still needed to do a 'Right to Rent ' check for the Border Force, as well as declare income to HMRC since the total income exceeds the Rent a Room Scheme limits.

As for the rent arrears - well, you could use that to justify earlier eviction ie "Pay the rent or leave in a week." If not paid, change the locks after a week while lodger is at work (shops wherever).

Having said all that, there is a small chance he might claim to be a tenant, and a small chance a court might agree based on the exclusive use of his room.

There's no 100% certainty in matters like this - only a judge can decide ultimately.


More info and links here:
* Lodgers: advice & links for landlords & lodgers

Honeylife

OP
You have made some errors in going about this entire Lodger stuff. Yes You have a LODGER end of. NOT A SUB-TENANT, NOT A TENANT! You are a RESIDENT LANDLORD The "contract" you have written wholly inadequate and you should have done far more research before writing it. Your LODGER I suspect, is far more clued up than you. Your LODGER should be given Licence Agreement i.e. a Licence to Occupy. You are very lucky they have not signed what you wrote!

This is one of the better online Lodger Agreements that I have come across. https://form.jotformeu.com/71053770625353 Or go to Rymans and buy one. You should sit down with your LODGER and both sign it on arrival BEFORE YOU HAND OVER KEYS! You cant give someone keys and they haven't signed the Agreement! Thats bizarre!

A LODGER gives you a Deposit you put it in a small basic bank account thats easily accessible and don't bloody touch it. You never ever use it to pay another LODGER/OCCUPANT. It is for Breakages, damages, non payment of rent or similar and should be return within 7 days of the LODGER departing from the premises.

You are the TENANT and sounds like you are using your LODGERS as a means of income to pay YOUR Landlord's rent. Fine, thats your set up, but the contract you have with your Landlord has nothing to do with your current awkward Lodger.

You can serve immediate notice as your LODGER has breeched his verbal agreement (which is a contract, but difficult to prove who said what in Court), but then you still don't have his deposit to hand, to refund him at departure Huge error!

Let your LODGER use his deposit as the months rent. Email him that you have agreed to this use of the Deposit, so its in writing. Hope he leaves quietly without more aggravation. Just let him go.

Remember this: A LODGERS Agreement does not grant a tenancy, merely a licence to occupy and the Agreement is excluded under Section 3A(2) of the Protection from Eviction Act 1977.

Now all that silly outrage "What Profit?" regards HMRC stuff. Don't be naive. You are charging rent it is INCOME. Still its simple. Under the rent-a-room scheme you are allowed to earn £7,500 per annum. You can have a salary of whatever amount and that sum is not touched under the rent-a-room scheme. But if you go over this figure in renting income, you must declare it to HMRC. So if have two lodgers and that is your ONLY income, then you need to have a chat with an accountant about your annual personal tax allowance (I think it is £11,850) and other allowances, so that you are able to do tax stuff correctly and not live in fear of being reported to HMRC and possibly heavily fined.

Read https://spareroom.co.uk and http://lodgersite.com/index.html

theartfullodger

I am not keen on tax fiddlers.....